Beat the Market

Tax reform is very likely to be passed in Senate now.  Dow Jones +1.39% to pass 24k, S&P +0.82%, Nasdaq +0.73% , lead by Energy and Industrial. Most tech companies also bounce back from the selloff yesterday, except some Chip-makers ( MU -3.1%, WDC -2.6% ) and Chinese companies ( BABA -1.6%, MOMO -5.9%, SINA -3.4%, WB -2% ). Winners Michaels ( MIK +11.6% ) ER beats. Also LZB +11.5% amid ER beats. KR (+6.1%) reported Q3 EPS of $0.44 beats by $0.04. Revenue of $27.75B (+4.5% Y/Y) beats by $290M. Share was up as much as 13.6%. COST (+3.9%) reported sales grew 13.2% Y/Y to $11.26B in November. Comp sales +10.8%. U.S. +10.2%, Canada +13.8%, Other international +11.1%. Share reaches all-time high. What Wholefoods threats? Many others, for instance, NVDA +2.2%, AAPL +1.4%, AMZN +1.3%... Losers JNPR (-6.2%) , Share jumped more than 22% yesterday AH amid NOK take-over talk rumor. NOK denied such talk. Share price gave back all those gain as well as the gain during...

The selloff in Tech is ugly today --- started early and stayed weak for the whole day. FAANG: NFLX -5.6%, FB -4%, AMZN -2.8%, GOOG -2.3%, AAPL -2.1% . Other hot names: SQ -8%, WDC -6.8%, NVDA -6.8%, MU -8.7%, BABA -3.2% , and so on. However, Dow Jones Index manages to finish @ new record +0.44% to 23,940 , benefited from Financials, Retailers and Airlines . Bitcoin jumped to $11432.67 (all-time high) before retreating back to below $10k ( $9880 now). The chart below is quite scary. Winners Retailers are red hot these days. Even Cramer, a long time retailer bear, wants to buy M (Mad Money yesterday). M +8.2%, TGT +9%, JWN +7.2%, UA +5.8%, GPS +5%, GNC +7%, RAD +14.3% ... Airlines finally feel the holiday as well, UAL +3.2%, HA +5%, DAL +3%, LUV +4.8%, ALK +2.7%. Banks continue their run from yesterday, BAC +2.3%, JPM +2.2%, C +1.8%, WFC +1.8%. CMG +5.6%, search for new CEO. DIS +1.8% , their new movie COCO is well received. ESPN will layoff more. 7.7% Dividend i...

Market shakes off weakness and resumes the rally, lead by Financials . FED Chair Nominee Powell had hearing before the Senate. He is expected to continue FED policy following Yellen. As I have discussed recently, retailers shine again as good data of holiday shopping is released. However, Tech is left behind. NFLX (+2.1%) is the only one finishes green among FAANG. NVDA -1.6%.  Crude -0.34% to $57.91. Gold -0.18% to $1,292.10 (resistance @  $1300 ). Winners Big banks are doing well today as Powell is dovish. BAC +3.9%, JPM +3.5%, C 3.3%, WFC 3%. Retailers, department stores: ULTA +5%, M +4.5%, SHLD +6.9%, JCP +4.8%, JWN +3.2%, KSS +1.8%, TGT +1.4%.  SQ (+4.2%), HPE (+3%) and HPQ (+1.9%) bounce back from recent selloff. Losers MOMO (-18.8%) , Q3 EPS of $0.45 beats by $0.07. Revenue of $354.45M (+125.7% Y/Y) beats by $15.16M. I believe the selloff is overdone, probably manipulated. MOMO is a cash cow and current valuation is unfair. The continuous ...

Market finishes mixed. Retailers enjoy the holiday sprit, especially online spending jumps 17% Y/Y . Energy and Basic Materials drag the whole market amid China effect (tightening borrowing to deleverage debts, Shanghai index has big drop in last few days). USO -1.7%. This week will be critical for tax reform , which faces more and more critism. Winners Retailers are broadly doing well today, from Amazon to department stores , from outfits to electronics. Encouraging data will come out in the following days. Qudian ( QD +10.6% ) finally has a bounce after 9-day drop, cutting the stock price to less than half. I have done some homework on this company. The company started in 2014. Most of customers were students, who had difficulties to purchase big ticket merchandise (for instance, iPhone). They started to make profit in 2016. Now they are trying to service millions customers who don't have credit card.  Their only ER after IPO was reported on 11/13: Q3 EPS of RMB 2.24...

Overall, market has little change today. Tech and Energy l ead the way; 6 sectors finish green with the other 4 in red. Crude jumps ( USO +1.8% ) amid inventory drop. Gold (+0.8%) also challenges $1300 again but fails to break out. Durable goods orders fell 1.2% in Oct. However, analysts believe it is temporary. Winners DE (+4.4%) reported good earnings, leading the industrial sector today. Amazon (+1.5%) and AAPL (+1.1%) rise before thanksgiving/Black Friday. XNET jumped another +12% today. Share price has doubled in a week, +521% YTD . I am not sure what is behind the crazy run starting from mid-Oct. Losers HPE (-7.2%) & HPQ (-4.9%) Earnings are fine, but HPE CEO Meg Whitman will step down. Overall, I think she did a good job to turn HPQ around. When she became HPQ CEO, the company was struggling and share price was close to $10. She stabilized the company and split it into HPQ and HPE in late 2015. After the big drop today, the sum is still north of $34. At c...

Tech leads the rally today. All sectors are in green, as well as crude and gold. Winners FAANG are all doing well today. other big moves include Tesla +3%, MU +3.7% , and so on. MLNX jumps 10.7% amid that Starboard Value discloses 10.7% stake in Mellanox, wants to improve margin and explore sale. XNET extend its recent run +13% today. Other Chinese tech stocks also perform well BIDU +2.4%, BABA +1.5%, JD +1.7%, SINA +1.2%, EDU +2.4%, YY +1% Losers Beijing has reportedly suspended approvals for new online micro-lenders. It seems a positive for existing players as the move halts competition, but they're all down sharply before market, although some of them recovers during the trading hours. QD -3.8% (was -28% @ market open), PPDF -14%, YRD -0.4%, XRF +3.3%.  VIPS Q3 EPS of $0.14 in-line. Revenue of $2.3B (+27.1% Y/Y) beats by $10M. However, shares -11.3% today. DSW (-13%) : Q3 EPS of $0.45 misses by $0.08. Revenue of $708.3M (+1.7% Y/Y) misses by $1.33M. DSW...

After back-to-back bounce-back from big early drop last Thursday and Friday, bears were defeated again. Market welcomes Thanksgiving in good mood. All three indexes finish green. However, Energy ( USO -0.6%, UNG -2.5% ), healthcare ( IBB -0.9% ) and Utilities lag. Gold also retreats. Winners Some Chinese tech stocks rally, for instance, BABA +1.6%, YY + 9.7%, XNET +25%, SINA +2.6%, WB +4.1%, MOMO +5.5%, SOGO +2.7%. As I said after NVDA ER, there is plenty room for NVDA to go up. NVDA +1.3% today, also MU +3.2%, MLNX +2%, LRCX +2.2%, AMAT +2%. Department stores keep their run going, M +2.2%, JCP +1.2%, KSS +1.4%, JWN +1.4% . PANW Q1 EPS of $0.74 beats by $0.05. Revenue of $505.5M (+27.0% Y/Y) beats by $16.5M. +6.8% AH URBN Q3 EPS of $0.41 beats by $0.08. Revenue of $892.77M (+3.5% Y/Y) beats by $31.77M. +2.2% AH (was up 6%) Losers Biotech headwind continues, IBB -0.9%, BIVV -9.5%, CELG -0.9%, BIIB -1.4%. Current correction is very similar to the one in 2016 Sept and O...

Market cools down a little bit today after the strong bounce yesterday. Strong housing starts data +13.7% as hurricane rebuild starts. Gold rallies ( GLD +1.2% ) to near $1300 today amid tax reform uncertainty --- Senates will vote after Thanksgiving. Some Republican Senates show hesitation. Crude oil also rallies, USO +2.5% . A video is released on Youtube by Boston Dynamics (Google company) that their new robot can back flip! Link Winners Foot Locker ( FL +28.3% ), +35% this week, and Shoe Carnival ( SCVL + 29.7% ), both reported solid earnings. Also lift DSW (+9.6%), FINL (+7.4%), DKS (+3%), NKE (+3.4%) . ANF also pops 23.5% : Q3 EPS of $0.30 beats by $0.08. Revenue of $859.11M (+4.5% Y/Y) beats by $40.21M. GPS (+7%) amid ER, I have discussed yesterday. ROST (+10%) also reported nice earnings, TJX +2.9%. TGT (+5.5%), KR (+5.1%). Overall, retailers feel the holiday and experience a nice two-week run. SPLK (+17.9%) reaches 52wk high after ER and guidance rai...

The market shows fresh strength today, lead by tech (Cisco) and consumer goods (Walmart, SJM). House passed its tax reform bill. Now it is up to Senates. Winners Walmart ( WMT +10.9% ) reported solid earnings this morning, beat both top and bottom lines. E-commerce grows fast. Comparable-store sales rise more than expected. Share price hit new-high. I would like to share some of my thoughts: as minimum wage increases and unemployment rate drops, WMT is in great shape. Dollar Stores (e.g., Dollar General) and Discount Stores (TJM and ROST) are in similar situation. However, the shrinking of middle-class causes headwind for department stores and Target (TGT), on top of the headwind from Amazon. Cisco ( CSCO +5.2% ) reported earnings yesterday AH and raised guidance amid strong software sales. J.M. Smucker( SJM +9.5% ) smashed estimates, which lifted the whole Staples Sector. Also benefited from earnings, RH (+25.4%) and NetApp ( NTAP +15.9% ) both jumped higher. TIME (+28.5...

It is a global selloff today. Japan -1.6%, Hong Kong -1%, FTSE 100 -0.6%.  However, I think there are no reasons to be panic yet. Retailers show some strength. On a Y/Y look, electronics/appliance stores (+2.1%), general merchandise stores (+1.4%), clothing/accessories stores (+0.4%), furniture/home furnishing stores (+4.8%) and health/personal care stores (+4.8%) all posted gains. Online retailers generated sales growth of 9.6% during the month compared to last year. Winners YY （+23.8% ） hit all-time high after a strong beat in its Q3 earnings. Vitamin Shoppe ( VSI +9.7%) and GNC Holdings ( GNC +6.4% ) jump on the news that Vitamin World is seeking permission from a bankruptcy court to begin the process to close 124 stores (1/3 of total) that it operates. Biotech ( IBB +0.4% ) has a small bounce today. CELG +1.5%, GILD +0.9%. Cisco ( CSCO ) reported Q1 EPS of $0.61 beats by $0.01. Revenue of $12.14B (-1.7% Y/Y) beats by $30M. Shares +4% AH. Losers Energy sector ...

US Market follows Asian and European market to cool down from recent rally. Winners Buffalo Wild Wings jumps 24% amid possible $150 take-over deal. AAP (+18%) auto parts stocks have a nice day after it beat EPS although missed revenue. Western Digital ( WDC, +3.6% ) pops after rumors the company is in settlement talks with Toshiba. Western Digital has attempted to legally block the sale of Toshiba’s chip unit on contractual consent right claims (from Sandisk). Toshiba needs to have the sale finalized by March to avoid Tokyo delisting. HD (+1.6%) reaches all-time high after ER beat, benefited from disaster recovery. Retailers bounce back from yesterday's drop. Consumer Goods and Utilities are the only sectors in green today. Losers In broad view, Energy and Basic Materials Sectors suffer the worst today. USO (-2.2%), UNG (-2%) probably due to the weak data from China. Biotech (IBB -1.6%) selloff continues from October. GILD -2.3%, CELG -2.3%. GE (-5.9%) : ...

Market manages to finish green although it opened in red. The Q3 earnings are almost done, 75% companies in S&P 500 were able to beat expectations. However, the outlook for Q4 is mixed. Some big names get punished for weak guidance. Winners QCOM (+3.1%) rejected Broadcom's offer. Higher bid is expected. ROKU (+27%) flies again. This reminds me GoPro. MAT (+20%), HAS (+5.9%) all jump higher after the take-over rumor (WSJ last Friday AH). No details have been reported yet. WUBA (+6%) jumped after reporting great earnings and up their guidance. TSLA (+4.1%) bulls are never tired. TSN (+2%) all-time high after solid earnings. In after-hour, Buffalo Wild Wings ( BWLD ) spikes 26% on reports that Roark Capital has made an offer for the company at $150 per share. Losers GE (-7.2%) cut dividend to half, cut board members, restructure the business, blablabla, the new CEO failed to deliver a solid plan and set a long-term goal. The stock price actually turned hig...

Market finishes mixed today, which marks 1st red week in two month (was up 8 weeks in a row). Such mild drop is healthy. Biggest event today --- Alibaba’s ( BABA +0.7% ) Singles’ Day event is breaking records again, as expected. Last year, the day-long sale brought in $17.8B. Washington Post reported that more than 200K Americans signed up for coverage under the Affordable Care Act on November 1, the first day of open enrollment, more than double the rate last year. Customer confidence drops a little from October, but still above 2017 average, which is good for retailers into holiday season. Winners NVDA (+5.3%) reported great earnings, sell-side gave up. More short-term upside is expected due to dominant role in AI and fast growth data center. AMD +1.3%, INTC -1.6%, MU +2.9%. JCP (+15.3%) ER beats, which is surprising because they issued warnings and cut guidance on 10/27 (just 2 weeks ago), thus sending all department stores into a miserable period. M +2.5% (still at $20...

Three indexes return to opening after a choppy day (depressing morning and sunshine afternoon). Nasdaq recovers from -1.5% to -0.6%. Three sectors ( Energy, Telecommunications, Non-cyclical consumer goods ) perform best today. The later two are the most beaten-down sectors this year --- Sector rotations ( click this brief introduction ). Utilities sector is also fine today. Three sectors ( Tech, Industrial, Basic Materials ) perform worst today. All these three are hot sectors this year. The Senate Republicans tax plan is out: featuring 7 individual tax brackets, the repeal of deductions for state and local taxes, a doubling of the death tax exemption and an increased child tax credit. The Senate bill also maintains the EV tax credit, the deduction for medical expenses and the $1M cap on the home mortgage interest deduction. For business, as reported earlier, the corporate tax reduction to 20% from 35% would be delayed until 2019, although corporations would be able to deduct a...

It is a quiet day. Trump is in China (still twittering). Democrats won the elections (NJ and Virginia Governors) yesterday. Winners Casino stocks have a really nice run recently. From 10/31, LVS + 10.5%, WYNN + 8.2%, MGM +8.2% , mostly due to the growth in Macau. I speculate profit taking might happen soon. AAPL (+0.8%) is planning AR headset in 2019. They will have iPad with Face ID next year. Apple is also developing original content -- orders two seasons of a dramatic series Witherspoon. They are definitely thinking about what is beyond iPhone X. Will these approaches successful? We will see. Apple is also on the news of paradise papers about avoiding taxes, and initiating $10B bonds (because most cash are offshore). Losers SNAP (-14.6%) I would like to stay away. Facebook will kill it sooner or later. LC (-15.9%) an online platform for small loans get punished by tightening underwriting standards for loan application. Sell-side thinks bad-loan is OK, slower revenue gro...

Market has little change today. However, we have many losers. Home ownership rose to 63.9% in Q3, the highest since 2014. below average 65%. All-time high was 69% before the housing crash 10 years ago. Mortgage rate is still historically low. Job openings remain high. Winners Weight Watch ( WTW +13.5% ) jumps after ER. Opera wins. CVS (+3.2%) ER beats, up guidance. FOX (+1.6%) FOXA (+1.1%) DIS (+1%) These three continue to rise after the news. Street likes the idea of Disney buying most part of Fox. developing story. NFLX (-2.1%). Losers Travel agent companies are all in deep red, PCLN (-13.8%) and TRIP (-23.6%) provided loomed guidance in earnings call yesterday. EXPE (-2.7%, gap down after ER last week ) . These companies are facing headwind from Airbnb. How long will this headwind last? I don't know, would like to wait for another 1-2 quarters. Mallinckrodt ( MNK -35.5% ) free-falls after it posted Q3 results that included a 10% drop in revenues. Prescripti...

The market just cannot drop anymore, although it looks tired to me. Three indexes are lifted by Energy and continuous run of Apple. Winners USO (+3%) crude price reaches two-year high to $57.3. During the weekend, a new wave of arrests of royals and ministers in a Saudi corruption probe caused the increasing tension in Middle East. When crude price was around $50 few weeks ago, I predicted $56 as price target. At this point, I have no idea which direction it will go from here. If the Middle East tension persists, it may test $60 before correction. DIS (+2%) is in discussion to buy most of FOX ( FOXA +9.9%, FOX +9.1% ). DIS will get the studio and TV shows. FOX will keep the News network and sports network. This will enforce Disney's strength in movie studio (more power to make rules for theaters) and enrich its contents for upcoming streaming service to compete with Netflix. DIS also has good news from Box Office that the 3rd Thor movie made $121M in US, and $151M outside (...

Market is boosted by Apple earnings, all three indexes finish green, leading by tech and healthcare. Major news: Trump starts his long Asian trip. Winners QCOM (+12.7%) : Bloomberg reported rumors that Broadcom (AVGO) is exploring a deal to purchase QCOM. Congratulations to those who bought the dip few days ago. AAPL (+2.6%) r eported surprising ER beat and bright outlook of iphone X. I would like to share some data and my thoughts. 2018Q1 and Q2 will probably great. P/E is standing @ 19 now. The following chart is the revenue data in the recent years. It took a dip in 2016 and recovered in 2017 --- $234B in 2015, $216B in 2016 and $229B in 2017, which means revenue dropped 2% from 2015 to 2017. On 1/1/2015, stock price was $109, it is $173 today. The huge factor will be iphone sale in China and the innovations beyond iphone X. If they cannot deliver, I believe the revenue will start to shrink again from 2018Q3. SBUX (+2.1%) stock price dropped more than 7% yesterday af...

President formally names Powell as Fed pick, which has already been priced in. GOP rolled out their tax reform plan. Analysts think their math doesn't add up. The legislation will take months if not longer. Nevertheless, there are a lot of victims today. First of all, middle class will not benefit. Also homebuilders , hardware stores and private investment institutions are hurt. Homebuilders Toll Brothers ( TOL -6.1% ) LEN ( -3.3% ), MDC, BZH, HOV, KBH, DHI, PHM, TMHC are tumbling thanks to the GOP tax plan which would seek to cap the amount of mortgage interest deductibility at $500K vs. the current $1M. ETF XHB (-2.7%) I TB (-2.5%) . Hardware stores are also down, HD (-1.8%). Private equity names are tumbling as the GOP tax plan would limit interest deductions of many companies to just 30% of EBITDA. APO -3.1% , Blackstone ( BX -1.1% ), KKR -2.3%. Winners JUNO (+21.8%) ER beats. upgraded to BUY with new price target of $65 by SunTrust. SunPower ( SPWR +15.7% ) on Q...

Market is mixed today, 5 sectors in red, the other 5 in green. It is relatively quiet today. GOP fails to rollout their tax cut plan. FED has nothing new. Winners BGS (+12.7%) had great earnings. EL (+9.2%) Q1 EPS of $1.21 beats by $0.24. Revenue of $3.27B (+13.9% Y/Y) beats by $100M. This gives some sunshine to retailers. X (+7.8%) The company delivered surprising good earning yesterday. Stock price jumped more than 15% in early morning before retreating some of the gain. GRPN (+7.3%) reported positive earnings --- 1 penny per share. GRMN (+5.6%) earnings beat, upside guidance. INTC (+2.7%) just cannot stop now. LVS (+1.6%) continues casino's run. DIS (+1.2%) Disney will release the new Star Wars movie (Last Jedi) on 12/15, and they are making their own rules for theaters. The company will collect strict 65% of the box office with many fine-print requirements. If the theaters voilate the requirements, sorry, 5% more goes to Disney --- making it total 70%. U...